Segmenting, Targeting &
Positioning
Ajilal
Figure 8.1: Steps in the Target Marketing Process
Sells multiple brands
within the same
product category for
a variety of products
Brands feature a
different mix of
benefits and appeal
to different segments
Has also identified
different niches within
certain segments
Product modifications
are useful: Tide offers
seven different product
formulations to serve
different niches’ needs
Procter & Gamble
Market Segmentation
Market
MarketSegment
MarketSegmentation
People or organizations with needs or wants and the ability and
willingness to buy
A subgroup of people or organizations sharing one or more characteristics that cause them to
have similar product needs.
The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.
MARKET SEGMENTATION =
Dividing market into segments,
each of which behaves differently
vis-à-vis your product
Selecting certain segment(s)
Developing one marketing plan for
each segment
Thinking small(er)
PRODUCT
MARKETSOFT
PILLOW
MEDIUM
PILLOW
FIRM
PILLOW
Stomach sleepers
Back sleepers
Side sleepers
Key: L, Large market; M, medium market; S, small market
L
L
L
M
M
M
M
S
S
Product/Usage Habits
Segmentation
Pillow Manufacturer
Segmentation ----WHY!!!!!!!!!!!!!!!!!!!!
Buyer Preference Patterns
Homogeneous preference
Diffused preference
Clustered preference
STYLE
DURABLE
Homogeneous Preference
-No natural segments
-All buyers have same preference
TITAN WATCHES
STYLE
DURABLE
Diffused Preference
-No pattern (…or poor research)
-Take center position
TITAN WATCHES
STYLE
DURABLE
Clustered Preference
-Natural segments
-Increases as number of competitors increases
TITAN WATCHES
Values of the Two Segments-
Youngsters & Adults - WATCHES
Attribute 1
PRICE
Attribute 2
BEAUTY
Attribute 3
DURABILITY
Adults
Youngsters
Segmentation Dilemma
Mass Marketing --
(Economies of Scale)
(However, everyone is
different)
CUSTOMIZATION
Choosing a Targeting Strategy
Undifferentiated Marketing
Differentiated Marketing
Concentrated Marketing
Customized Marketing
Undifferentiated Marketing
Appeals to a broad spectrum of
people
Efficient due to economies of scale
Effective when most consumers
have similar needs
Example: Big Bazaar
Differentiated Marketing
Develops one or more products for each of several customer groups with different product needs
Appropriate when consumers are choosing among well-known brands with distinctive images and it is possible to identify one or more segments with distinct needs for different types of products
Example:Lakme, Ponds, Fair & Lovely
Concentrated Marketing
Entails focusing efforts on offering
one or more products to a single
segment
Useful for smaller firms that do not
have the resources to serve all
markets
Example:HMT Watches
Customized Marketing
Segments are so precisely defined that
products are offered to exactly meet the
needs of each individual– Example:
Mass customization is a related
approach in which a company modifies a
basic good to meet the needs of an
individual– Example: Dell Computers
Segmentation
Why segment?
– Identifies opportunities and needs.
– Allows firm to focus on specific needs.
– Improves marketing mix for each segment.
– Allows small firm to exist.
The Importance of
Market Segmentation
Markets have a variety of product
needs and preferences
Marketers can better define
customer needs
Decision makers can define objectives
and allocate resources more accurately
Criteria for Successful
Segmentation
Criteria for
Market Segments
Substantiality
Identifiability
Accessibility
Responsiveness
Criteria for Segmentation
Substantiality
IdentifiabilityMeasurability
Accessibility
Responsiveness
Segment must be large enough to warrant a special
marketing mix.
Segments must be identifiable and their size measurable.
Members of targeted segments must be reachable with
marketing mix.
Unless segment responds to a marketing mix differently, no separate treatment is needed.
Segmentation Bases
Characteristics of
individuals, groups,
or organizations used
to divide a total market
into segments.
(variables)
Bases for Segmentation
Behavioral
Benefits Sought
Psychographics
Demographics
Geography
Bases Used toSegment
ConsumerMarkets
Geographic Segmentation
Region of the country or world
Market size
Market density : TV Companies
Climate: woollen clothes
City
Bases for Segmentation
Behavioral
Benefits Sought
Psychographics
Demographics
Geography
Bases Used toSegment
ConsumerMarkets
Bases for
Demographic Segmentation
Age: Cartoon Network; MTV; News Channels
Gender: Cosmetics & After Shave
Income: Economical & Luxury goods
Ethnic background: Food
Family Life Cycle: Life Insurance Companies
Generation: Apparels
Education
Occupation: PC Selling
Bases for Segmentation
Behavioral
Benefits Sought
Psychographics
Demographics
Geography
Bases Used toSegment
ConsumerMarkets
Psychographics
Psychographic segments market in terms of shared attitudes, interests, and opinions
Segments include demographic information such as age and income, but also includes richer descriptions
Some organizations develop their own psychographic segments for their consumers, but others utilize national systems (VALS by SRI International)
Bases for
Psychographic Segmentation
PsychographicSegmentation
Personality
Motivation
Lifestyles
Attitude
MOTIVATION
•Health Supplements
•Cosmetics
•Safola
•Life Insurance
•LG Products
Life Style: VALS
VALS Framework•PRINCIPLE ORIENTED:
•Fulfilled: Mature, Well Educated, Informed, Respectful but Open minded
•Believers: Conservative, Conventional, follow established rules
•STATUS ORIENTED:
•Achievers:Committed to family and Work, Image is very Important
•Strivers: Unsure of themselves, Money is a measure of success
•ACTION ORIENTED:
•Experiencers: Young, Vital, Enthusiastic, rebellions
•Makers: Practical, Suspicious of new ideas, value working with their hands
Bases for Segmentation
Behavioral
Benefits Sought
Psychographics
Demographics
Geography
Bases Used toSegment
ConsumerMarkets
Benefit Segmentation
The process of grouping
customers into market
segments according to
the benefits they seek
from the product .
Maruti Esteem, Honda City
Bases for Segmentation
Behavioral
Benefits Sought
Psychographics
Demographics
Geography
Bases Used toSegment
ConsumerMarkets
Segmenting by Behavior
Behavioral segmentation slices
consumers on the basis of how they
act toward, feel about, or use a
product
Behavioral Segmentation
Variables
Market Segmentation
Occasions
User Status User Rates: Airlines
Loyalty Status: Credit
Cards
Readiness Stage
Attitude Toward the Product
Business Marketing SegmentationGeographic
Customer Type
Customer Size
Product UseBusinessMarkets
Purchasing Criteria
Purchasing Strategy
Importance
Personal Characteristics
Micro-segmentation
Macro-segmentation
Steps in Segmenting a Market
Select a
market for
study
Choosebases
for segmen-
tation
Selectdescrip-
tors
Profileand
analyzesegments
Selecttarget
markets
Design,imple-ment,
maintainmkting
mix
Target Market
A group of people or
organizations for which an
organization designs,
implements, and maintains
a marketing mix intended to
meet the needs of that
group, resulting in mutually
satisfying exchanges.
Strategies for Selecting
Target Markets
ConcentratedStrategy
UndifferentiatedStrategy
MultisegmentStrategy
Undifferentiated
Targeting Strategy
Advantages: Potential savings on
production and marketing costs
Disadvantages: Unimaginative product
offerings Company more
susceptible to competition
Concentrated
Targeting Strategy
Advantages: Concentration of resources Meets narrowly defined
segment Small firms can compete Strong positioning
Disadvantages: Segments too small, or
changing Large competitors may market
to niche segment
Advantages: Greater financial success Economies of scale
Disadvantages: High costs Cannibalization
Multisegment
Targeting Strategy
Positioning
Developing a specific
marketing mix to influence
potential customers’ overall
perception of a brand,
product line, or
organization in general.
Position
The place a product, brand,
or group of products
occupies in consumers’
minds relative to competing
offerings.
Effective Positioning
Assess the positions of
competing products
Determine the dimensions of
these positions
Choose an effective market
position
Positioning Bases
Attribute
Price and Quality
Use or Application
Product User
Product Class
Competitor
Positioning Bases